Adventures in Legal Outsourcing to India and Beyond

June 2013

June 12, 2013

There
is only one US law firm managing a legal outsourcing company in India. Now
that firm, co-founded by yours truly, has taken matters a step even further. The
"Star of Mysore" newspaper reports on this today as follows:

Mysore-based
LPO (Legal Process Outsourcing) SDD Global Solutions Pvt Limited, an affiliate
of SmithDehn LLP, which is best known for its representation of prominent film
studios, television companies, and entertainment clients around the world, will
now be known as SmithDehn INDIA.

Starting
from today, SmithDehn LLP has lent its name to the Mysore firm. One of the main
reasons SmithDehn LLP has allowed the Mysore company to use its law firm’s name
is the high-end nature of the work the Mysore professionals do. The services
they perform make SmithDehn INDIA more like a law firm, and less like a typical
LPO operation. The new name is expected to be more effective in attracting
clients who are more comfortable with legal outsourcing when the offshore
company is affiliated with a Western law firm, and in attracting top-notch
employment talent from around India.

SmithDehn
INDIA's public announcement offers more details:

Plenty
of Western law firms now use off-shoring of legal services routinely, whether
they like it or not. Many have been pushed into it by cost-conscious clients. But
SDD Global's name change reflects how the situation with SmithDehn is different.

"First
of all, we don't just tolerate sending work to India; we love it, and we're
proud of it!" says one of the firm's co-founders, Russell Smith. A
Columbia Law School graduate and counsel to celebrities such as film star Sacha
Baron Cohen, and other media players like HBO and Paramount Pictures, Smith explains
it this way: "The overnight turnaround, the cost savings we pass on to
clients, the increase in our number of clients and assignments, the high
quality of the Indian workforce... What's there not to love? We owe our growth
and profitability to a strong policy of wowing clients. With the Mysore team,
we've had to chuckle, because clients actually use the word, 'wow.' They say it
again and again!"

When
asked whether his firm loses revenue to India, Smith responds with an emphatic
"no." "The situation is the opposite," he says. "The
Indian operation increases our law firm's revenues. When
western companies find out about our less expensive, faster, and better
service, they hire us. Often they send work to our law firm that otherwise would
have been done in-house, or not at all. One filmmaker told me that without the
low fee we charged for the legal work, his film could not even have been
released, much less could it have won the acclaim it received. So while we send
a significant portion of our work assignments to India, it's part of a much
bigger pie that's created when legal services are affordable. India gets more
revenues, but so does our US law firm. That's one reason why outsourcing
actually increases, not reduces, the number of Western jobs. In the case of
SmithDehn LLP, we've hired more Western attorneys precisely because of the
expanded workload coming in from our outsourcing model."

On
the subject of lower costs in India, Smith says it's not just about salaries.
"Yes, we can be one of the highest-paying employers in Mysore, and still
pay much less in salaries than we would in Los Angeles or New York. But the
savings come also from much lower office rent. Most prominent Western law firms
lose a huge chunk of their revenues to big city landlords, for office space.
Why should we pay tens of thousands of dollars per month in New York or Los
Angeles or London, to provide a place for people to work for our clients, when
the Mysore operation can function just fine at $540 (Rs. 27,000) per
month?"

Another
reason SmithDehn LLP has gone so far as to allow the Indian company to use its
law firm name is the high-end nature of the work the Mysore professionals do.
The services they perform make SmithDehn INDIA more like a law firm, and less
like a typical LPO (legal process outsourcing) operation. Vidya Devaiah,
Managing Director of the company, puts it this way: "We don't offer legal
advice or replace Western lawyers, but we do most of the research, analytics,
and drafting work that goes into the final product. We're talking about
sophisticated, intellectually challenging assignments, not document coding or
clerical work. That's why our company has been given screen credit in over 25
films and television series, right next to the credits for the law firms. We're
doing work that clients really appreciate. And that's the case not only for
entertainment clients, but also for many others, and for law firms other than
SmithDehn, who also hire us and rely on us."

Indeed, the SmithDehn INDIA phenomenon
appears to be part of a much larger developing trend -- one that could have
huge implications for the legal world. For example, in a report last September
by the Outsourcing Unit of the London School of Economics, in
a section headed, "LPO Providers Will Move Up The Value
Chain," two experts concluded that legal outsourcing providers
increasingly will take on more sophisticated assignments:

costs available
through labor arbitrage. Clients initially feel most comfortable sending
discrete work with low complexity and low criticality offshore, the so-called
'white chip' work. (In poker, tradition has it that white chips are the least
valuable, red chips are of medium value, and blue chips are most valuable.) If
LPO follows a path similar to ITO and BPO growth, the LPO market will move up
the value chain to include more red chip and even blue chip work."

Given
that hundreds of billions of dollars are spent each year for this kind of work,
the possibilities for growth of companies like SmithDehn INDIA could be
enormous.